The current penalties regime under schedule 55 FA 2009, which came into effect as of October 2011 provides:

• Failure to submit monthly return by 19th month = £100

• Monthly return is still outstanding after 2 months = additional £200

• Monthly return outstanding after 3 months = additional £300 or 5% of the CIS deductions from the return (whichever is higher)

• Monthly return outstanding after 6 months = additional £300 or 5% of the CIS deductions from the return (whichever is higher)

• Monthly return outstanding after 12 months = additional £300 or 5% of the CIS deductions on form the return (whichever is higher)

These penalties also apply to NIL returns.

Additional penalties can be levied on the following basis:

• For information deliberately withheld from HMRC = up to 100% of the CIS deductions

• For information negligently withheld from HMRC = up to 70% of the CIS deductions

In additional to the above penalties HMRC can levy up to £3000 per monthly return submitted if you incorrectly tick the self-employed status declaration when your subcontractors should have been employed.

The final CIS specific penalties which can be imposed are:

• Failure to provide CIS records to HMRC for inspection = up to £300, plus £60 per day outstanding

• Making a false statement in order to obtain gross payment status = up to £3000